Here are two truths: 1. No matter how financially savvy you are, the odds of you becoming as wealthy from investing as Warren Buffett, 94, who boasts a net worth of $166 billion, are incredibly slim. 2. You stand to build significant wealth if you pay attention to and emulate the moves that Buffett makes.
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Buffett has always been generous with his learnings. He frequently provides insights around how the people of all statuses and backgrounds can build wealth and reach financial freedom. At the core of his investing philosophy is patience. He fervently believes in letting time work its money-making magic.
This can be frustrating to hear because time can feel achingly slow moving when you’re scrimping by. But Buffett’s staggering wealth is proof that you can get rich over time. Here are four simple money moves inspired by Buffett’s philosophy that can set you up for long-term wealth.
Ditch The Credit Cards (OK, You Can Keep One)
Any financial expert worth their salt abhors credit card debt, but some have a more lenient approach to using credit cards than Buffett. He has a near-zero-tolerance policy for these potential weapons of mass financial destruction. He’s said he has just one credit card himself — an American Express card he opened in 1964. Buffett’s a cash guy and reportedly keeps about $400 on him, according to a 2019 article from CNBC.
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Start Small With Investing
Many people are under the impression that you need a sizable nest egg to start investing. Buffett knows this isn’t true. You can — and should — start small if you’re new to the game. As long as you’re committed to letting your money grow, you’ll reap the benefits. That small amount will multiply.
“If you are working with a small sum of money … and are willing to do the work, there is no question that you will find some things that promise very large returns compared to what we will be able to deliver with large sums of money,” Buffett said.
Take Time To Understand What You’re Investing in
It’s critical that you never invest in anything you don’t thoroughly understand. Even if a company is as famous as, say, Apple or Nvidia, don’t put money into it without conducting in-depth research, from its annual earnings to its leadership.
“Risk comes from not knowing what you are doing,” Buffett said.
Trust in the Wealth-Building Value of Compound Interest
If you had to boil Buffett’s entire investment philosophy into one sentence, it would be: “Trust in the wealth-building value of compound interest.” That’s not a direct Buffett quote, but it sums up his guiding sentiment.
When you secure your money in a trustworthy, well-researched portfolio of investments, all you really have to do — aside from keeping a general, non-obsessive eye on things and ideally maintaining regular check-ins with a financial advisor — is let time do its thing.
Buffett has likened the power of compound interest to a little snowball that rolls down a hill and collects more snow as it goes. That snow is wealth, and if you sit back and avoid making panic moves amid stock market turbulence, that wealth will be yours.
This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 4 Simple Money Moves That Will Make You Rich Over Time
